Avon to Fire 1,300 Workers by End of 2006

Avon Products Inc., New York, NY, said that it is getting rid of 1,300 employees by the end of the year. The company also noted that it would record $70 million in charges in the first quarter in connection with its previously announced restructuring.

The company pointed said that a board committee approved terminating the positions to remove layers from the organization, as well as initiatives to exit certain unprofitable operations.

According to its annual report, Avon employed 49,000 full-time employees as of Dec. 31. Of those, 8,700 were employed in the U.S. and 40,300 in other countries.

In February, Avon said that it expected the cost of implementing its multi-year restructuring plan to be about $500 million; It’s estimated range was $300 million to $500 million. The implementation of the plan would continue over the next three years and additional charges relating to restructuring will take place in the first quarter.

The company said that each initiative is expected to be completed in 2006 and is a part of its multi-year restructuring effort.

Avon expects to record total charges of about $95 to $100 million (before taxes) in connection with these initiatives, including $73 million of employee-related costs, $8 million of asset impairment costs, $13 million of contract termination costs and $1 million of other costs.

About 85 to 90% of the total charges associated with these initiatives are expected to result in future cash expenditures, according to the company.

Shares closed down 6 cents at $30.68 Monday on the New York Stock Exchange.